Banks behind loan defaulters' visa renewal hurdles

Immigration, police only acting on criminal complaints filed by banks against defaulters

Banks have to take the blame for stopping loan defaulters from renewing their residence visas and not immigration departments or police, legal experts have said.

“The immigration or the police can only act on criminal complaints filed by banks against their defaulting customers,” said Mustafa Zafeer OV, managing partner and senior lawyer, Mustafa and Almana.
 
According to him, the banks have the option of filing a civil case but they do not do it. “If the banks were keen only on making the person pay up, they can file a civil case. But that is not what they mostly do,” he said.
 
Responding to media reports that residency departments are not renewing visas of expatriates living and working in the country if they are wanted by police, Aji Kuriakose, a Sharjah-based lawyer, said: “There is no way the authorities are going to renew the visa of any individual against whom a criminal case is pending. All his dependents will unfortunately face the same situation and there’s nothing new in it.”
 
According to him, it is not just the renewal of residence visa but any document that requires government approval will be withheld. “The accused cannot even renew his car or driving licence when a case is pending against him,” added Kuriakose, a senior advocate at Al Roken and Bin Eid.
 
His company alone is dealing with more than 100 cheque bounce and loan default cases. “There are instances where some banks have gone ahead and filed a case soon after a single installment is delayed or not paid,” he added.
 
However a senior lawyer from Fichte & Co Legal Consultancy wondered how an individual would be able to repay the loan if his residency status was not ratified.
 
Commenting on the issue of renewing residency permits of employees of a company owned by a defaulting individual Walid Jaafar, a Partner at Fichte & Co said, “In theory this should be possible as the company has its own personality independent of its shareholders. However, in criminal cases involving the managers or owners of a company, it might be difficult to process any transaction as the residency departments might go as far as blocking the files of such company in their system until matters have been regularised."
 
Recently a senior HSBC official had said that sending defaulting customers to jail was the most effective way to retrieve the loan.
 
Local dailies had reported that expatriates who have defaulted on bank loans or have other financial issues will not be able to renew their residence visas.
 
A Gulf News report quoted an Interior Ministry official as saying the residency departments will not renew the residence visas of expatriates if they are wanted by police for finanacial obligations.
 
Residency visas of expatriates, their relatives and their employees will be renewed only after the settlement of the financial disputes, it added.
 
Several residents told Gulf News that applications to renew their visas were rejected because banks had lodged complaints against them with police, who had issued arrest warrants.
 
Police have instructed residency departments to arrest these expatriates or send them to the authorities.
While this is the rule, Interior Ministry officials said they consider some cases on humanitarian grounds.
 
Lawyers, however, stressed that the police have no right to ask residency departments to arrest people who have defaulted on bank loans or other financial issues.
 
Residency departments, lawyers said, are administrative units and have no right to arrest or punish people by not renewing their residence visas for such matters.
 
Major-General Nasser Al Awadi Al Menhali, Assistant Undersecretary in the Ministry of Interior for Naturalisation, Residency and Borders, told Gulf News if banks file a case with police against a person for financial issues, such as delayed payments of loans or bounced cheques and an arrest warrant is out, no transaction is carried out for that person.
 
He said residency departments do make exceptions. "We look at the case on humanitarian grounds. We renew the residency visa if the person has a family, wife and children," he said.
 
"The ministry does not want to increase the number of illegal residents. The residency department does not arrest people if they are involved in bank loans but we ask them to sort the matter out."
 
Dr Khalifa Rashid Al Sha'ali, a lawyer and legal expert, told Gulf News that when police ask to bar a person from getting his visa, it is meant to pressure him into paying his dues and protect the other party's rights.
 
However, Dr Al Sha'ali said not renewing the person's residency visa is a kind of punishment or pressure that is illegal and unjustified.
 
"It is illegal if the residency department does not renew someone's residence visa if they do not pay their bank loans. There is no article in the law which says residency will not be renewed for not paying banks, for example," he said. 
A businessman told Gulf News that this step by the residency department is illogical.
 
"It punishes the company for an issue that involves the employee. The loan defaulter in turn is punished using a different tool and is made illegal."
 
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